BOSTON, December 22, 2016: A Morgan Lewis team led by Boston partner Jordan Hershman pressured counsel representing shareholders of Israeli biopharmaceutical company Macrocure Ltd. voluntarily to dismiss a class action that they filed in the Southern District of New York. That suit was aimed at enjoining Macrocure's pending merger with Morgan Lewis client Leap Therapeutics, Inc., a clinical-stage biopharmaceutical company acquiring and developing novel therapeutics at the leading edge of cancer research. Plaintiffs' Complaint alleged that disclosures in Macrocure’s Proxy Statement and Leap’s Prospectus violated Section 14(a) of the Securities Exchange Act of 1934.
Companies facing class actions of this nature, which are prevalent, often settle, agreeing to make amendments to their proxy statements proposed by Plaintiffs and paying Plaintiffs' counsel hundreds of thousands of dollars in attorneys' fees in order to avoid a legal fight. Instead of opting for such a settlement strategy, on Friday, December 9, 2016, the Morgan Lewis team sent correspondence to class counsel detailing the reasons why Plaintiffs’ claims lacked a valid legal basis and demanding that, if they did not drop their case that day, Defendants would promptly move to dismiss and for an award of attorneys’ fees. Plaintiffs' response asserted that Morgan Lewis's arguments were unfounded and threatened to proceed to schedule their motion for preliminary injunction before the vote if Leap refused to correct their allegedly deficient disclosures.
Undeterred, the Morgan Lewis team sent a second letter to Plaintiffs at 3 PM that Friday, distinguished Plaintiffs' cases, and again demanded that they dismiss their case that day or face the threatened motion. When Plaintiffs failed to do so, the Morgan Lewis team followed through on its threat, filing, with Macrocure, a joint motion to dismiss and for fees before the court opened on Monday, December 12. At 9:00 am of that morning, Plaintiffs’ counsel caved to the pressure and agreed voluntarily to dismiss their case. The quick and cost-effective resolution of this case allows Leap to close its acquisition on schedule and without risk of delay.